Jan. 21 (Bloomberg) -- BlackBerry Ltd. shares surged as the
U.S. Defense Department said its smartphones will be the primary
device supported on a new network, showing that rivals are
finding it difficult to unseat the longtime government supplier.

About 80,000 BlackBerrys will start being hooked up to the
department’s management system at the end of this month, the
Defense Information Systems Agency said in a statement last
week. The network will also include 1,800 phones and tablets
based on Apple Inc.’s iOS software and Google Inc.’s Android
operating system.

BlackBerry rose 9.4 percent to $9.93 at the close in New
York. The company’s Canadian shares had already jumped 8.2
percent yesterday in Toronto while U.S. exchanges were closed
for Martin Luther King Jr. Day. After tumbling 37 percent last
year, the U.S. shares have gained 33 percent this year.

The Waterloo, Ontario-based company is counting on loyalty
from customers like the U.S. government after losing market
share to Apple and Android devices for years. Its smartphones
hadn’t been able to match the same features and range of
consumer-focused applications of the iPhone or Samsung Galaxy.

John Chen, who took over as chief executive officer in
November, is reorienting the company back to its core of
business and government users, pledging to predominantly make
models fitted with BlackBerry’s traditional physical keyboard in
the future.

The Pentagon’s statement shows that Samsung Electronics
Co., the biggest maker of Android devices, and Apple aren’t
making the inroads into military smartphone sales that many
expected because they can’t always meet the security
specifications the Defense Department wants, said Doug Pollitt,
a broker at Toronto-based Pollitt & Co.

Unclassified Documents

“It’s a challenging specification, and other vendors are
having a tough time meeting it,” said Pollitt, whose brokerage
owns shares of BlackBerry. “BlackBerry has already got it.”

The defense agency known as DISA, which implements the U.S.
military’s information-technology policies, will introduce the
first phase of a new system on Jan. 31 to make it easier for
personnel to work on unclassified documents from wireless
devices. A military app store will be included in the first
phase, and the program currently supports 16 mobile apps,
according to DISA’s statement.

Adam Emery, a spokesman for BlackBerry, declined to comment
on the statement.

‘Ample Liquidity’

Today’s gain follows a 6.1 percent advance for the U.S.
shares on Jan. 17 after Citron Research published a report
calling for the stock to climb to $15.

“BlackBerry has a healthy balance sheet, with ample
liquidity to execute its turnaround strategy and make the
necessary investments for growth,” according to the report.
Citron added that while it more typically makes short-selling
bets against a stock rather than a long position, this was not a
time to bet against BlackBerry.

“It is suicidal to bet against well-capitalized, strong
management in the enterprise mobile space,” Citron said.

BlackBerry is poised to add to its cash reserves with a
deal announced after the close of trading today to sell most of
its Canadian real estate. In partnership with Los Angeles-based
CBRE Group Inc., BlackBerry will sell vacant and occupied
property and then lease back buildings it needs, the company
said in a statement. The sales include more than 3 million
square feet (280,000 square meters) of space, BlackBerry said.

“This initiative will further enhance BlackBerry’s
financial flexibility, and will provide additional resources to
support our operations as our business continues to evolve,”
Chen said in today’s statement.

The stock climbed as much as 6.4 percent in late trading
after the company disclosed the real-estate plans.